Lies the Greens Tell You

The one thing you hear repeatedly these days is that it will take 10 years or more to see the benefits from the removal of the executive order against offshore drilling. The unstated conclusion is, why bother drilling (and causing untold environmental damage!) because it won’t help the immediate gasoline price crisis. Well, its not exactly true that it will take 10 years to see any benefits from offshore drilling but the Greens don’t want you to know that.

Exploring for oil is an expensive business. You have to spend a lot of money on a high-risk venture. It may take years before you start seeing any cash flow and longer before you recover your initial investment and start to make a profit. The oil companies know this and they do everything they can to shorten the period between their first expenditure and selling oil. They also hire some of the smartest engineers in the country to help them.

In the old days, wells were drilled vertically. Sure, they could take off at a slight angle, but the bore was still essentially a vertical hole. That meant that you could only expose an amount of the oil-bearing formation to the well bore that was equal to its thickness. (Y’all know that oil is found only in certain layers of rock that were laid down as sedimentary deposits way back when, right?) If the thickness of the layer was 30 feet, that was all you got use of the well. It should be no surprise that the production rate of a well is proportional to the thickness of the formation exposed to the well bore. The more formation exposed, the higher the production rate.

But today, technology improvements allow something called “horizontal drilling”. That means a well can be drilled horizontally through the formation and you can expose as much of the formation to the well bore as you want. Instead of 30 feet you might get 100 feet or more. Production rates from individual wells have increased dramatically.

The down side is that these wells are expensive to drill and only get more so as water depths increase. Back in the days of shallow water vertical wells, it made economic sense to drill several test wells before committing to the cost of a full-scale development. These wells were needed to define the extent of the reservoir and provide economic justification for the development. This took time and, yes, many years could elapse between discovery and production. But now, with high priced deep-water wells, the oil companies want to start selling oil as soon as they can. Hence, they use a strategy called “Extended Well Test” using an “Early Production System”.

With this strategy, instead of drilling several wells to test the extent of a reservoir, they put ONE well on production for an extended period and use the data from that well to evaluate the size of the reservoir. The advantage is that while they are gathering data, they are selling oil and making money.

An “Early Production System” is a portable production system that can be hooked up to a well for a couple years and then disconnected and moved someplace else. Typically, they are FPSOs (Floating Production Storage and Offloading) that can be towed to location and moored at the site. They are big enough to allow for plenty of oil storage before being offloaded to another tanker if there is no oil pipeline nearby. The natural gas is used for fuel and the excess is either re-injected to the formation or sold to a nearby gas pipeline.

Mobil Oil did this in offshore Equatorial Guinea back in the 90’s. The reservoir was pretty risky and they didn’t want to spend the money to drill a bunch of test wells. They decided to do an Extended Well Test to see if the reservoir was worthy of full-scale development. They used an FPSO named the “Zafiro Producer” until they proved the size of the reservoir. Then they built and installed a fixed platform. Meanwhile, the ”Zafiro Producer” was selling oil. This went on for years. In fact, the “Zafiro Producer” is still on location and producing today. So you see, the technology for Early Production and Extended Well Test has been around for a while and is proven.

So don’t believe anyone when they tell you that the development time for offshore fields is 10 years. It just ain’t so anymore. An Early Production System can be used to start production in just a couple of years.